The hybrid (phygital) world of physical and digital is a reality for IT infra across traditional and modern organizations. But how are technology providers shifting gears with this colossal change with their R&D department, ecosystem partners, and end-user customers? CIO India had an extensive interaction with Deb Deep Sengupta, president and MD, SAP India on the new tech landscape and how SAP is enabling the enterprises to transition seamlessly to become digital businesses.

Edited Excerpts.

What are the definite opportunities and visible roadblocks in the evolving digital economy of India?

Besides the ‘business as usual’ status quo, most CIOs and even CEOs in India are expecting technology providers to help them stay ahead in the marketplace on two fronts: Optimize their existing investments and help them innovate.

Most people feel optimize and innovate as ‘either or’ but these two (rather) different aspects go hand in hand. From Innovation aspect, every customer today is bombarded with tech jargons, management consulting jargons, business strategists. The companies have been used to do business in a certain way for say last three to four decades. Innovation cannot be bought in the form of a technology product or services. It is a cultural shift that happens by taking right steps with an innovative technology provider and staying on course by adding new capabilities.

Serving customers in India and globally over the years, SAP itself has transformed significantly in terms of company type and portfolio mix for the digital age, especially in the past five years. CIOs want to partner with someone who can co-innovate for both to learn and co-create together. SAP does a lot of design thinking with its customers for a new business model or business process that involves all stakeholders: Customers, customers’ customers, suppliers, suppliers’ suppliers and others. Some reference models or prototypes built through ideation are put in technology framework that provides speed, agility and RoI.

My 5 Megatrends for Phygital World

1

Connected Products

2

Intelligent Assets

3

Smart Cities and Smart Grids

4

Services-First Model

5

Enhanced User Experience

For example, SAP Leonardo is a leading technology platform that connects people, things, processes and objects intelligently. IoT is one big aspect but other main tech components include big data, AI, machine learning. Delivery of business outcome in specific situations has been our approach in the digital world to engage with our customers on the ‘enterprise to large enterprise’ spectrum.

But there is visible (and huge)skill sets shortage for new technologies like IoT, Big Data, machine learning in India. How would technology providers bridge these gaps?

The key reason of SAP to make the market transitions and technology overhaul successfully is because of our ecosystem that thrived more than us. Some of the ecosystem players are much larger than us on the big end of the town. And there are startups too. SAP understands the importance and urgency to fulfill this necessity and has formed a three-year plan to plug this digital gap via its partner ecosystem.

We are committed to skill, reskill and upskill 1.5 million SAP consultants from the present number of two lakh by 2020. We are working on the university alliance program with over 200 plus universities. We are providing the digital readiness kit (DIY self- starter pack) to every SAP consultant across the country. We have plans to Increase SAP authorized training centers from 55 to 100 in tier-2 / tier 3 cities. The recently launched Bharat ERP program with MSME intends to train 30,000 SMEs on SAP B1 in 3 years.

There is a huge shift in the ecosystem as the earlier services model that drove IT across companies is now expected to deliver business outcomes. The hours spent, experience skill sets, availability of resources is no longer a differentiation as a tech provider. Those parameters are relevant as long as the business outcome – for start-up or legacy company of any size - of any tech product or solution or service they are investing into.

The cycles of innovation, adoption, and consumption of technology have drastically shortened. It has now transformed into insights, real time data, and convergence of technology and business models.

Deb Deep Sengupta, President & MD, SAP Indian Subcontinent

We are many commercial as well as GTM models which are very much outcome based, transaction based and very closely linked to business results. Like we have SAP Concur, a travel and travel expense management company or the procurement platform of Ariba.

SAP S/4HANA has been a game changer as per company executives, industry analysts, channels and the end customers since its launch. What’s the split of S/4HANA of on premise versus cloud?

First and foremost, we provide choice to the customer – on premise, cloud and hybrid. We have three versions - S/4HANA (On Prem), S/4HANA Enterprise cloud (Private or hybrid) and full blown S/4HANA public cloud. SAP is possibly the only platform where the code is same unlike any other ERP or other platforms with different codes. We have 45 ways of expertise of building the enterprise app platform with industry specific extensions. We are helping our customers migrate seamlessly across models and importantly as per the choice they want.

Today, large companies keep their core financials on the on prem world but they might put the subsidiary accounting on S/4HANA public cloud. We see many conglomerates move to hybrid cloud version because the migration to the newer version of SAP in the past was quite painful due to a lot of custom code being written. Now the landscape of particularly large enterprises has become very complex. The biggest business driver for them to move from ECC 6 to S4 HANA is the simplification of infra landscape and simplification of App landscape. In the process, they don’t want to let go of their specific customer development which gives them unique business benefits. The single code of S/4HANA for on premise to private cloud to public cloud version is a unique proposition by SAP. They can migrate in gradual steps from on prem to private cloud to public cloud.

For mid-size and smaller companies and even company subsidiaries, they can go to the public cloud from day one. In India, many SMEs have leap frogged as they don’t have much legacy IT. Like the mobile revolution in India which makes it ‘mobile only’ market and not ‘mobile first’ per se. It might take years for a large enterprise to manage internal change compared to SMEs. Cloud is the best way for SMEs in most cases because it offers faster time to market, brings down innovation, adoption, and consumption cycle.

You spoke about innovation and agility in the new-age tech world. What is new expectation list of modern CIOs from SAP?

Most CIOs and CTOs want SAP to be their trusted advisor. Their companies have made investments over the years as much as 70 to 80 percent of their core processes run on SAP. That forces us to change our model from being a technology provider or ISV to become a trusted advisor. The aim is to to- innovate and co-create technology platform for the customers that can be adapted for the consumption to increase. That’s the change that they expect from us in the way we engage with them.

Deb Deep Sengupta’s India Priorities

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Co- innovate with existing customers on their digital transformation journey.

2

Partnering in national building initiatives on IT infrastructure and digital literacy.

3

Empowering Indian SMEs to become more competitive on global scale.

Another big factor is that our buying centers have changed from CIOs to CTOs, CMOs, CHROs of the end-user organizations. Technology has become an integral part of every LOBs and BU. CIOs are becoming or rather renamed as chief innovation officers or CDOs (Chief Digital Officers) to drive the change as technology has become a core of everyone’s business. We have to now address different buying centers within one organization unlike in the past.

Your bucket list of Dos and Don'ts for Indian CIOs opting or contemplating S/4HANA.

CIOs can move to or adopt S/4HANA for two big benefits - simplification or reimagination. Simplification of infra landscape, app landscap, and user experience is a must-have for the ultra-complex technology world and ever-demanding business climate.

Reimagining is not about recreating the past into a new platform but it is more about building new capabilities in the digital world. Every company is becoming phygital. Online is no longer another channel but it is now the business model for companies.

Replicating the traditional model to online is a cumbersome option. Hence companies need to build an online or digital model for the new consumer category for new geographies (rural), millennials, women etcetera. The replication of physical model to online model might not work for the new consumption patterns. Simplification and reimagination are my two mantras for CIOs and CXOs to go on S/4HANA.

With the diverse geography and new consumption pattern across India’s digital revolution, how do you effectively cover the country expanse?

India is not one market but it is country of many markets located in various clusters. Like Automotive in Coimbatore and pune, textile cluster in Cochin as few examples. Secondly we need to address the market across the various strata of consumers. SAP used to be B2B company but today it is B2B2C especially with online, digital and payments industry as we address the end consumer as well.

How we partner, both with customers as well as ecosystem to make the offering in sachet size which works in India. The recent GST in a box and GST app by SAP was to simplify, prepackage and make it consumable at different points not only in metro cities but more than 25 locations across India.

If given a crystal- ball, what technology trends do you see impacting the phygital world over next couple of years?

Let me put it in a different context than the usual technology trends of Cloud, Mobility, Big Data to name a few. Technology has evolved as innovation, adoption and consumption cycles have really shortened. It has now transformed into insight, real time data and converged of technology and business models. It is now a completely a ‘data-driven’ culture from the earlier ‘process driven’ culture.

Whether it is modern buzzwords AI or IoT, the business use cases would largely revolve around connected products (connected car or connected fridge), intelligent assets and smart cities / smart grids that will have far reaching impact on every business and every part of the society.

Every company today wants to offer better quality of services to their customers. That is possible if you invert the revenue model from selling a product to selling an outcome. Emergence of services model and better User Experience are basic industry expectation which tech trends has to serve to. For user experience and agility cloud comes in with a simple release quickly gauge the adoption rate. One can pick the pieces that work and scale it up. The rest can be killed which do not work and make little business sense.